Revenue update on EWSS ‘sweepback’ payments and the taxation of TWSS and PUP payments

Today (25/09/2020) Revenue has provided updates in relation to the following:

  • the processing of the first phase of EWSS sweepback payments in respect of July and August 2020
  • and
  • additional information in relation to the payment of any tax due arising from amounts received by employees under the Temporary Wage Subsidy Scheme (TWSS) and Pandemic Unemployment Payment (PUP).

EWSS payments for new hires and seasonal workers

The Employment Wage Subsidy Scheme (EWSS) allows employers who are eligible and registered for the scheme to make a backdated claim to 1 July 2020 in respect of newly or seasonally hired employees that were ineligible for the TWSS.

The facility for eligible employers to claim a subsidy on behalf of eligible employees for July and August through Revenue’s Online Service, ROS, has been available since 15 September 2020. Revenue has already processed the first sweepback of EWSS payments based on applications submitted by eligible employers to date.

Commenting on the first phase of EWSS sweepback payments, Ms Orla Fitzpatrick, head of Revenue’s Medium Enterprises Division and responsible for implementing the EWSS said:

“Revenue has now processed EWSS sweepback payments of over €12.1 million on behalf of almost 2,700 employers and in respect of 15,100 employees. These payments are now in the nominated bank account for the majority of those employers. Employers who wish to claim a subsidy on behalf of eligible employees for July and August can still do so by submitting their applications through ROS before 14 October. Applications will be processed weekly up to that date.”

Over 36,700 employers are now registered for the EWSS. As applications for the scheme cannot be backdated, it is essential that employers register for the scheme prior to the first pay date in respect of which EWSS is being claimed.

Updated detailed guidance on the operation of EWSS, including specific guidance on anti-abuse measures, will issue today.

Specific guidance in relation to the July/August sweepback can be found here.

Taxation of payments received under the Temporary Wage Subsidy Scheme and Pandemic Unemployment Payment

Today, Revenue also announced further details in relation to the taxation of the Temporary Wage Subsidy Scheme (TWSS) and the Pandemic Unemployment Payment (PUP).

Most income is liable to income tax and USC (Universal Social Charge) and is deducted in real-time when an employee is paid by their employer. However, TWSS and PUP payments were not taxed in real-time and instead are liable to income tax and USC at the end of the year (2020).

Outlining the details of today’s announcement, Revenue spokesperson, Mr Declan Rigney explained:

 “In January 2021, Revenue will make a Preliminary End of Year Statement available to all employees, including those who were in receipt of the TWSS or PUP. The Preliminary End of Year Statement will include pre-populated information showing the amount of TWSS and/or PUP payments, if any, received by the employee concerned according to Revenue records. The statement will also provide employees with a preliminary calculation of their income tax and USC position for 2020 and will indicate whether their tax position is balanced, underpaid or overpaid for the year.

When the Preliminary End of Year Statement is available, employees will have an opportunity to update their personal record, declare any additional income and claim additional tax credits due, such as qualifying health expenses, via myAccount, to arrive at their final liability for 2020.”

Outlining Revenue’s approach to collecting income tax and USC liabilities if they arise, Mr Rigney concluded:

“Employees will be given the opportunity to fully or partially pay any income tax and USC liability through the Payments/Repayments facility in myAccount. Otherwise, Revenue will collect the liability, interest free, by reducing the employees tax credits over 4 years to minimise any hardship. The reduction of tax credits will start in January 2022.”

[Ends 25/09/2020]